Life insurance

[Rodstaxes1]

My wife stopped her life insurance and took all the money in it. I am guessing it was an annuity, anyway we have been paying into it for a long time so we got the check and the money was taking out for Fed tax .  the amount was 51,000.00 TAXABLE was 9,000.00 but turbo tax is calling it retirement money and has added it to our income. I filled out the 1099-R information

Should just not worry about how turbo tax is calling it??

[SharonD007]

TurboTax is calling it retirement income because the withdrawal was reported on a 1099-R.  1099-Rs are used to report annuities, pensions, IRA's, and other retirement income.

For more information, refer to the TurboTax Help article When to Use Tax Form 1099-R: Distributions From Pensions, Annuities, Retirement, etc.

[Rodstaxes1]

This was life insurance isn't  there a difference between an annuity and life insurance??? I don't know if it was an annuity. The company is call accordia Life AND annuity. Is there a different form I should fill out for life insurance withdrawal  

[ThomasM125]

Since you had a surrender value benefit, it is treated like a pension plan withdrawal. The life insurance policy with a surrender value is life insurance unless you cash it out before the death of the policy holder.

The $9,000 taxable amount is the earnings on the money put into the plan, if that is paid out as a death benefit, it is not taxable. If you take it out before then, it becomes taxable.

[Rodstaxes1]

I am not sure how we have paid $300.00 a month for over 30 years and now they want us to claim the $300.00 a month that I already paid taxes on, they want us to claim it as INCOME?? that's not right.

Am I misunderstand this?

[Rodstaxes1]

I understand I have to pay on the interest, and that ok but if I am claiming the other as retirement income that money I have already paid tax on is going to get taxed again.  I t was more like a saving account in my opinion.

turbo tax as put that money as retirement income.